Tax Schemes
Enterprise Management Incentive (EMI) allows companies to offer flexible incentives that are tax-advantaged for companies and employees who meet the qualifying criteria.

This share option scheme is government-backed and allows you to share the ownership of your business with employees.  This is particularly beneficial to startups as it acts as an incentive to retain the best talent who will remain with the company as the business grows.

The company is limited to a £3m total value of shares and an individual employee is limited to a total value of shares of £250,000.

To qualify, companies must satisfy certain conditions:

 

  • The company must carry out a “qualifying trade” and must have a UK permanent establishment.
  • A “qualifying trade” is one that is carried out with the intention of making a profit.
  • “Non-qualifying” trades include farming, dealing in Iand, financial trading & banking, leasing and property development, provision of legal services and ship building.
  • Company assets must not exceed £30m at the time the EMI option is granted.
  • The shares must be granted in an independent company or in the case of a group, the parent company.
  • The company must have less than 250 full-time equivalent employees at the time the EMI option is granted.
  • A full-time employee is one who works 35 hours a week or more.
  • Employees must spend at least 25 hours a week, or if less 75% of their working time carry out the business of the company.

The shares are bought at a fixed price known as the Exercise Price which is agreed with HMRC.  Under this scheme the only tax that comes about is capital gains tax and this is at a reduced rate of 10% if the shares are held for more than 24 months.  The scheme provides a benefit for employees and encourages them to perform well.  Generally, no income tax or NIC are payable when an employee takes up the EMI option. As a startup this can help a company provide incentives to keep skilled and talented employees and attract future employees.

You can find out more about the EMI share scheme here:- https://www.gov.uk/tax-employee-share-schemes/enterprise-management-incentives-emis

We can help you setup an EMI share scheme. Contact us at AccountsPro on 020 7193 8798, via email at hello@accountspro.co.uk or send us a message via our contact page:- https://accountspro.co.uk/contact-us/

 

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